Morocco. Grain and Feed Annual. Oct 2014 Oct. 14, 2014
NOTE: This report was originally prepared in March 2014 and reflects the situation and outlook at that time. It is being republished to reflect several oversights at that time
For MY2014/15, Morocco total grain planted area is estimated at 4.5 million HA with 3.06 million HA of wheat and 1.44 million HA of barley. The overall grain crop is reported to be in good condition and the harvest is expected to be average because of late and poorly distributed rainfall in many areas of production. Post estimates total cereal production for MY2014/15 to be around 5.4 million MT, with wheat production around 3.7 million MT and 1.7 million MT of barley.
Morocco’s per capita consumption of wheat, estimated at 258 kg annually, is among the highest in the world. Total Moroccan wheat consumption is estimated at 8.3 million MT with about one third supplied by imports. Barley is consumed mostly as animal feed in Morocco with total consumption estimated at around 3 million tons per year. Irregular rainfalls from September to February 2014 might have an impact on pasture condition and will likely increase demand for feed barley this year.
Morocco’s total cereal imports for MY 2013/2014 will end at around 3.6 million MT, with 3.3 million MT for wheat (common and durum wheat) and 0.3 million MT for barley. Morocco’s common wheat imports have been slow in the second semester of 2013 due to a higher domestic wheat collection rate and fluctuating wheat prices on the international market. To alleviate the pressure of fluctuating international wheat prices and to ensure sufficient wheat supplies in the local market, Morocco suspended the import duty for common wheat from January 1, 2014 until April 30, 2014. In addition, the government established an import subsidy scheme for a limited time effective February 1, 2014, through which Moroccan wheat importers are reimbursed for the difference between a government set-price 2,800 dirham/MT ($337) and their actual import costs. For MY 2014/2015. Post estimates wheat import to be around 3 million MT and barely at 0.35 million MT.
Morocco continued to maintain close price control of wheat and flour at all levels. Under the wheat price support scheme, producer reference price for locally grown soft wheat is set at 2,800 dirhams per ton, subsidized at 100 dirhams per ton compared to last season. A joint decision made by the Ministry of Economy and Finance and the Ministry of Agriculture and Marine Fisheries to ensure proper marketing of 2013-2014 grain harvest. Total cost for national wheat flour is 3,254 dirham/MT ($392) and its price for end-users is set at 2,000 dirham ($240)/MT. Though the GOM has kept the price of bread unchanged throughout the year, it had to do so at a huge budget cost.
In 2013, the compensation fund budget reached 42 billion dirhams ($5 billion), 23 percent less than the budget allocated the previous year. These funds include 2.3 billion dirhams dedicated to help pay the cost difference for the National flour. For 2014, the government, in an attempt to gradually reform this fund, has only allocated 35 billion dirhams, under the Finance Act, recently passed by Parliament and approved by the Constitutional Council. But, due to high social pressure related to inflation and purchasing power, the total liberalization of prices will not go unnoticed. 4 billion dirhams was added by end of February 2014. Given that the government still intends to provide direct subsidies to the populations in need, the reform would be progressively implemented for a three year period depending on the product’s sensitivity.
Morocco production depends heavily on rain precipitations and even in good years, the country relies heavily on wheat imports from the international markets to cover its consumption needs. After a low rain level in the planting period, cumulative rainfall has been significantly improved, registering 194 mm as of February 14, 2014, which is still less than average for the same period compared to a normal campaign. Dams’ capacity has been filled to 11.23 billion m3 as of February 14, 2014, compared to 12.36 billion m3 in the previous year on the same date. Reserves in dams for agricultural use are estimated at 9.36 billion m3 compared to 10.51 billion m3 and their overall filled capacity rate is around 68 percent.
Morocco’s total planted area (common wheat, durum and barley) for MY 2014/15 is estimated at 4.5 million HA, about 15 percent less than last year. Wheat planted area is estimated at 3.6 million HA, about 13 percent less than last year, consisting of 2.07 million HA of common wheat and 0.99 million HA of durum wheat. Barely planted area is estimated at 1.44 million HA, a 20 percent decrease from last year. For the MY 2014/2015 crop, the government reported 50 percent of the sown area to be in a good condition, 32 percent is in average condition, and 8 percent is in a bad condition. Most of the wheat in bad condition is located in southern and eastern Morocco and is concentrated mainly in the following regions: Doukkala-Abda (Hmar) and Chaouia–Ouardigha, Marrakech-Tensift – Al Haouz (Skhour Rhamna and Chichaoua) and Souss Massa- Drâa. The remaining 10 percent of sown area is irrigated production is in good condition.
Production of Wheat and Barley (1,000 MT)
Marketing Year Crop
Source: Ministry of Agriculture data /
The Government of Morocco has not issued its official grain production forecast. Post estimates that total wheat (common and durum) production for MY 2014/2015 will be about 3.7 million MT while barley production will be about 1.7 million MT, and accordingly the total projected production will be about 5.4 million MT for common, durum, and barley.
Government support for cereal production
The Moroccan government has been encouraging farmers to use certified seeds by providing 40 to 60 percent of the cost. For the MY 2014/2015 crop, the government initially planned to increase the availability of certified seeds by 33 percent to reach 200,000 MT. Moroccan farmers are increasingly using certified seed, which currently represents almost 60% of total seed use. Certified seeds provided under this program are part of the Green Morocco plan (GMP) with a stated goal of reaching 280,000 MT by 2020. One of the main objectives of the GMP is to improve the use of certified seed and to secure its domestic market supply. 150 million dirhams was invested to upgrade the infrastructure and organization of the National Seeds Marketing Company (SONACOS). 120 million dirhams financed by the government and 30 million dirhams by SONACOS. Other measures to support grain production include subsidies for farm machinery purchases and irrigation equipment that range from 30 to 70 percent of the purchase cost and subsidization of soil testing to optimize fertilizer usage. Marketed fertilizer for 2013 was estimated at 670,000 MT, which is 17.5 percent higher compared to the previous season. This year the Ministry is supplying the market with 0.12 million (MT) of fertilizers.
In September 2011, the Government of Morocco implemented a crop insurance program to help grain and pulses farmers deal with the risks associated with the impact of weather conditions on production. The crop insurance program, which exceeded its initial target of 300,000 HA for MY 2012/2013 crop, is projected to cover 600,000 HA for MY 2014/15 crop, which represents about 12 percent of Morocco’s total grain area. The program aims to mitigate financial losses due to droughts, floods, sand storms, and hail. The Moroccan Government will subsidize about 50 to 90 percent of the farmers’ insurance premium, depending on the size of the farm. The government intends to expand the area to one million HA by 2015.The Government is also pursuing its water management program by preparing 50,000 HA of additional irrigation equipment in order to reach 410,000 HA by the end of 2014.
Wheat consumption per capita in Morocco is estimated at 258 kg annually, which is among the highest in the world. In the past decade, consumption has been driven by rising population coupled with diversification of bread products; this is especially the case in major cities where the higher income population tends to concentrate. Common (bread) wheat is a politically and socially sensitive commodity in Morocco. The government devised a mechanism by which bread wheat prices have been successfully maintained at low levels and the government treasury has supported the difference in costs. The Moroccan Government continues to subsidize more than one million MT of common wheat flour commonly known as “national flour” presumably to make flour available to the low-income consumers. The distribution of the subsidized flour is subject to heavy government control at all levels. The government has set up all processing parameters including the extraction rate, extraction margin, ex-mill prices, wholesale and retail prices. The wheat (whether local or imported through the national cereal office’s tenders) enters flour mills at the same price 2,800 DH/MT for the standard quality and the government supports the difference. The government, however, does not get involved in marketing and pricing of durum wheat in the local markets.
There are about 154 common wheat industrial processing mills in Morocco with a capacity of about 10 million MT and about 34 specialized on durum wheat with a capacity of 1.16 million MT, and 12 specialized on barley with a capacity of about 0.3 million MT. In addition, there are literally thousands of traditional small family-run wheat processing mills located mostly in small towns and rural areas.
The wheat mills capacity is generally underutilized which has opened an opportunity for the wheat millers to process wheat for exports, especially to African countries. U.S. wheat is viewed by many Moroccan millers as an “enhancer” of flour performances, and hence some quality oriented mills have been buying it. For MY 2013-2014, the total cereal milling of flour and semolina production reached 3.41 million MT (2.4 common wheat, 0.33 durum wheat, 0.05 barely, and 0.63 corn), marking an increase of 32 percent compared to the same period last season.
Barley is consumed mostly as animal feed in Morocco, with total consumption roughly estimated at about 3 million tons per year. The consumption fluctuates heavily depending on pasture conditions. Sheep production is most dependent on pasture lands with farmers using barley grain as a secondary provision. Barley is also used in the feed processing sector for cattle and dairy production. According to the Ministry of Agriculture’s latest inventory, Morocco had an estimated 17 million head of sheep and 2.7 million head of cattle in 2010. Irregular rainfalls from September to February 2014 might have an impact on pasture condition and will likely increase demand for feed barley this year. As of February 2014, Morocco’s barley reserve was estimated at about 80,000 MT. Feed barley prices in the local market were estimated at 2,907 dirham per MT ($350). In 2014, barley prices registered a downtrend compared to 2013. Domestic barley prices were estimated at about 3,420 dirhams ($410) per MT, about 12 percent more than imported barely.
Post estimates that total cereal imports for MY 2013/14 will reach 3.6 million MT with wheat imports at 3.3 million MT and barley imports at 0.3 million MT. To alleviate the impact of international prices on domestic market and to keep the price of common wheat around 2,800 dirhams per ton ($336), the GOM established a subsidy scheme from February 1 to April 30, 2014, for common wheat used to make flour for low-income consumers “national flour,” The GOM covers the difference between the actual price and guaranteed mill price. Durum wheat is not regulated.
Morocco has become one of the world’s major wheat importers in recent years. Morocco’s imports of common and durum wheat tend to fluctuate from year to year reflecting the swings in local production. Provided minimum specifications, Morocco remains a price oriented market and importers must compete with the cheaper origins
According to Moroccan official data, imports of wheat (common and durum) and barley have reached as of February 2014, 2.54 million MT, a decrease of 40 percent compared to the same period of last year. These imports include respectively, 1.5 million MT of Common wheat, 0.8 million MT of Durum wheat, and 0.24 million MT of barley. The United States remained almost absent from the wheat market for the third year in a row. Morocco’s durum wheat imports were supplied solely by Canada. In general, the EU wheat suppliers have a competitive edge over U.S. suppliers because of their proximity to the Moroccan market and their ability to export the small size shipments desired by the Moroccan buyers. In addition, the EU has larger wheat TRQs under the Morocco-EU free trade agreement. However, recently Black Sea suppliers have been gaining ground compared to EU competitors.
The lower imports in the second semester of 2013 were mainly due to Morocco’s higher rate of domestic wheat collection and fluctuating international wheat prices, coupled with the government’s slow reimbursement of the import price differential to wheat importers under the restitution scheme. It is expected that wheat imports increases in the remaining months of MY 2013/14 in expectation of the average coming crop. For MY 2014/15, Post projects Morocco’s wheat imports will total 3 million MT.
Morocco’s local barley production normally covers about 80 to 90 percent of its domestic demand with imports making up the rest. From June 2013 to February 2014 and according to ONICL, Morocco imported 241.850 MT, an increase of 100 percent, compared to the same period in the previous year. France supplied about 70 percent of Morocco’s barley imports for the mentioned period. Post estimates Morocco’s barley imports are expected to end MY 2013/2014 at around 300,000 MT. For MY 2014/15, Morocco imports are forecasted to total around 350,000 MT following 2014/15 average crop that will increase demand for feed barley imports. Morocco’s barley imports for brewing average about 15,000 MT per year and are relatively stable.
Moroccan Flour Export:
Although Morocco is a net importer of wheat, it exports limited quantities of wheat flour to neighboring African countries. Morocco’s wheat flour exports reflect the excess milling capacity in the industry; hence, millers have been able to process wheat cheaply for export destinations. For the period January-September 2013, according to official trade data, this number has reached 130, 280 MT.
Grain stocks held by farmers fluctuate significantly in Morocco, and they are very difficult to assess. Stocks held by agents licensed by the Cereal Office (grain merchants, cooperatives, processors) and government managed port silos are normally known. The table below provides data on grain stock holdings in Morocco by the end of January 2014.
In CY 2013, Morocco’s total storage capacity remained unchanged compared to CY 2012 and totaled 4.48 million MT. More than 50 percent of the storage capacity is concentrated in the regions of Fes-Boulmane, Casablanca and Doukkala-Abda. The wheat stored at these silos accounts for about 10 percent of the total stored wheat in the country.
Morocco’s wheat reserve as of January 31, 2014 totaled 1.42 million MT, which was 9 percent higher compared to the same period the previous season. The Moroccan government policy concerning the strategic wheat stocks is to maintain available wheat supplies to cover three months of wheat consumption. As of October 2013, the wheat collected was estimated at 1.4 million MT, which 3.5 months of local industrial millers demand. This was mainly due to lower wheat imports in January and February 2013.
Storage facilities and port handling
A large silo facility with a storage capacity of 42,000 MT and discharging capacity of 16,000 MT/day that was built by a private Moroccan investor in JorfLasfar port in 2008 is now fully operational. This facility contains two 400 MT/hour screw conveyors and a conveyor belt with a capacity of 800 MT/hour. The JorfLasfar port currently has the deepest berth (12 meters) of all grain docks in Morocco and is capable of handling grain ships with loads up to 40,000 MT. Another private sector silo with a storage capacity of 66,000 MT (operational capacity of 55,000 MT) was built by a Moroccan company in the port of Casablanca. This facility expanded the total capacity of the Casablanca Port to 110,000 MT.
Morocco imposes tariffs on wheat imports on a periodical basis in order to protect the local grain producers from foreign competition. The government usually intervenes when the supply and demand situation in the local market requires such intervention. With mounting pressure from fluctuating wheat prices on the international markets, and to ensure sufficient wheat supplies in the local market, Morocco suspended the import duty for common wheat from January 1, 2013 until April 30, 2014. In addition, the government established an import subsidy scheme for a limited time effective February 1, 2014, through which Moroccan wheat importers are reimbursed for the difference between a government set-price (2,800 dirham/MT, about $337) and the wheat prices in the international market.
The allocated budget to support wheat imports from October 1 to December 31 was initially estimated at 1 billion DH ($116 million). Morocco’s common wheat imports during this period reached 1.38 million MT, corresponding to a subsidy of 832 million DH. In this case, Morocco utilized 83 percent of its initial restitution budget, which is explained by a higher domestic wheat collection rate, which reduced wheat import demand. During the extension phase effective until April 30, 2013, the government did not limit the quantity or budget for the restitution scheme.
Given the size of the Moroccan wheat crop in MY 2013/2014, the tariff rate quotas (TRQs) for U.S. common wheat exports under the FTA were set at their minimum level of 360,000 MT for CY 2013. Though the US remain almost absent from the market for the last couple of years, on August 13, 2012, however, Morocco’s tender to import 300,000 MT of common wheat from the U.S. under the TRQs was not successful. There was no participation from the Moroccan importers due to the soaring wheat prices on the international market and the lower wheat prices on the domestic market and an imminent suspension of import duties. The remaining U.S. common wheat quota of 60,000 MT was not tendered in CY 2012. In CY 2012, the TRQ for U.S. durum wheat of 310,000 MT was rendered ineffective due to an import duty suspension throughout the year.
Given that Morocco’s common wheat production totaled 2.7 million MT during MY 2012/2013, the U.S. common wheat TRQ for CY 2013 is estimated at 548,592 MT. The durum wheat quota is estimated at 320,000 MT for CY 2013. On January 10, 2013, Morocco’s tender to import 160,000 MT of U.S. durum wheat under the TRQ was not successful due to lack of participation. On March 21, 2013, Morocco launched a second tender of 160,000 MT to fulfill its obligation for durum wheat in CY 2013 that was also unsuccessful.
Barley under the FTA
Under the US-Morocco FTA, import duties on barley would be phased out in equal installments over 15 years. The base import duty for barley negotiated under the FTA was 35 percent. The tariff rate quota for CY 2013(the eight year of the agreement) is set at 16.3 percent.
Moroccan wheat farmers have the option to sell their production in the local markets if prices are more appealing than the minimum government guaranteed price. To sell at the pre-set government price, farmers must deliver their crop to licensed grain merchants, cooperatives, or millers. The pre-set price is for a standard quality and deductions or bonuses apply to take into account deviations from the standard quality.
Common wheat accounts for most of the grain that goes through the official distribution channels in spite of the yearly variations caused by the size of the harvest. As of October 2013, the total quantity of common wheat delivered by farmers through the official channels (authorized grains merchants, grains cooperatives, and wheat millers) was estimated at about 2,042 million MT, of which 99 percent was common wheat. The Moroccan Office of Cereal and Pulses (ONICL) collected about half of the domestic wheat through biding to make subsidized flour. For MY 2013/2014, the wheat collection rate was higher compared to previous year.
In MY 2012/2013, grains merchants, flourmills, and cooperatives accounted for 69 percent, 26 percent, and 5 percent, respectively, of the grains collected through the official channels.
U.S. Wheat Marketing Activities
The U.S. Wheat Associates Office in Casablanca continues to implement market development and promotional activities to expand U.S. wheat exports in Morocco and other North Africa markets. These activities include the support of a milling school that is managed by the Moroccan Miller Federation, as well as other market development and trade servicing programs targeted at wheat buyers in the region. In December 2012, the U.S. Wheat Associates organized its annual Crop Quality Seminar in Casablanca for Moroccan end-users, including private millers, importers, and regulatory officials
Cereal farmers in Morocco have the option to sell their common wheat production to government licensed traders (grain merchants, cooperatives, and mills) at a preset price (2,800 dirham/MT) or sell it in the free market. Prices of other grains (including durum wheat and barley) are freely negotiated in the market place. During the period June 2013- to mid-February 2014, common wheat prices in the local markets averaged 2,588 dirham/MT. For the same period durum wheat prices averaged 3,150 dirham/MT, while barley prices averaged 3,020 dirham/MT. Compared to the same period in the previous season, prices of the three commodities declined by 1.25 percent, 5.49 percent, and 9.76 percent respectively. The stability of common (bread) wheat prices in the local market during this period reflects the success the government’s measures have made in alleviating the impact of fluctuating international wheat prices and ensuring sufficient wheat supplies in the Moroccan markets